Payroll Cost Transfer

Purpose

The purpose of this policy is to ensure compliance with federal policies and guidelines related to the transfer of salary adjustment to federally funded sponsored projects.

The university receives significant funding for sponsored projects and organized research from federal and state governments, private foundations, organizations and industry. There must be accurate salary allocations when these funds are expended for salaries and wages of faculty, staff and graduate assistants.

The Federal government has established policies, concerning the assignment of costs to federally sponsored agreements, in 2 CFR 200, Section E and within specific agency policies on cost transfers.

To comply with cost allowability and allocability requirements of 2 CFR 200, Section E, it is necessary to explain and justify transfers of charges onto federal awards from other federal accounts, non-federal accounts or University accounts. Timeliness and completeness of explanation of transfer are important factors in supporting allowability and allocability in accordance with the principles of the Circular.

NIH Grants Policy Statement

Cost transfers to NIH grants by grantees, should be accomplished within 90 days…transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official of the grantee…An explanation merely stating that the transfer was made “to correct error” or “to transfer to correct project” is not sufficient. Transfers of cost from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Grantees must maintain documentation of cost transfers…and must make it available for audit or other review.

To comply with these requirements the following policy outlines the procedures and approvals necessary for the processing of cost transfers at Clarkson University.

Policy Statement

Each department is responsible for complying with and administering the following policies and procedures.

It is expected that the Principal Investigator (PI) or their delegate will review the fiscal status of their sponsored project accounts regularly and promptly correct salary transactions that are incorrectly recorded.

The University recognizes that transfers of costs from one sponsored project account to another are occasionally necessary to correct bookkeeping or clerical errors in the original charges. The University also recognizes that closely related work may be supported by more than one funding source and that in such cases a transfer of costs from one funding source to another may be proper. These transfers should be rare. Repeated use is an indication that employment transactions are not being managed properly through the Payroll Authorization process.

Cost transfers should be accomplished within 90 days of the effective date of the original entry. Those after 90 days required additional approval. When the need for a cost transfer to a sponsored project account arises, the Cost Transfer must be have an explanation and justification attached to the transfer request. The explanation for the cost transfer must be clearly stated and must be sufficient for an independent reviewer (i.e. an auditor) to understand the transfer and conclude that it is appropriate. According to Federal regulations, “An explanation which merely states that the transfer was made ‘to correct an error’ or ‘to transfer to correct project’ is not sufficient.”

Cost transfers are for correcting errors and are not to be used as a means of managing available cash balances or as a matter of convenience are not allowed. Expenses transferred on to a sponsored project account are very prone to audit and must be clearly supportable. Transferring costs because of a deficit or other reasons of convenience is not appropriate. Any shared costs should be pro-rated among the applicable accounts at the time the costs are incurred to the maximum extent possible. Charging costs to one sponsored project with the intention of repaying that sponsored project when an award is received is also not appropriate.